"The decision... is based upon the Department's tentative findings that the proposed commercial agreements are not adverse to the public interest because they would not substantially reduce competition, but that antitrust immunity (ATI) is not required by the public interest because, as currently structured, the agreements would not offer consumers any more benefits than they would be likely to obtain through ordinary commercial cooperation without ATI," the DOT said.

The Department said that the partnership as such is unlikely to distort competition on the Hawaii-Japan market and as such, it will not be "adverse to the public interest".

However, the DOT underlined that the granting of an ATI requires a higher burden of proof than a JV.

"We only grant the antitrust immunity to the extent necessary for the parties to go forward with the transaction. Based on our review of the evidence, we tentatively conclude that the Joint Applicants have not demonstrated that the enhanced public benefits they describe require ATI; rather, the evidence shows that those benefits could be achieved through additional investments in the alliance relationship they already have," the DOT said.

In particular, the DOT pointed out that Hawaiian has been adding capacity to Japan even without the ATI, while JAL has been more conservative even in its strategic plans. The Department also said that the applicants failed to demonstrate additional benefits of an ATI compared in terms of codeshare and scheduling coordination in comparison to what is permissible without an ATI.

"The Joint Applicants still have a number of activities they could pursue within their existing commercial relationship that could offer public benefits. Based upon the facts, the proposed JV is not likely to offer substantially more benefits versus the status quo," the DOT concluded.

The carriers said they will "carefully review the preliminary decision", calling it "discouraging".

"We continue to believe the proposed joint venture has the potential to bring additional travel choices and benefits to our mutual customers," JAL said in a statement for Cirium.

All parties have until October 17 to submit answers to the show cause order issued by the DOT.

About Hawaiian Airlines

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